KPN presents strategy up to 2015

 KPN will present its strategy for the period to 2015 during its Investor Day in London on 10 May. The new strategy will be entitled: "Strengthen - Simplify - Grow." CEO Eelco Blok said KPN will continue to focus on investing into its fixed network (VDSL and FTTH). The company will offer more total packages and also its brands Telfort and XS4All will come out with triple play deals. This approach should lead to a greater number of services sold per household. Meanwhile, the TV offering will be improved and the number of stores will advance to 300.

For the mobile market, KPN will this summer introduce ‘data-centric' subscriptions. The speed of the mobile network will also be further increased. The operator is implementing the changes in response to evolving consumer behaviour which on 21 April prompted a profit warning, as mobile voice and SMS traffic revenues feel the pressure.

For the business market, KPN wants to meet growing demand for integrated IT services, flexible workplaces, cloud computing and videoconferencing. There will also be services specifically geared for the SOHO segment. KPN Business and Getronics will be further integrated.

Attention will also be put on simplifying the organisation and improving the quality of services. Call centres will get a different structure with specialised agents, while websites will become service channels. The number of calls received by call centres should therefore decrease by 25 percent, as should the number of times a technician is deployed. In addition, there will be a number of small management changes, with a flatter hierarchy. The focus will go to providing services, and complex technological processes will be outsourced. This will enable the previously announced job cuts of 4,000-5,000 in the Netherlands. Meanwhile, E-Plus CEO Thorsten Dirks will become responsible for Mobile International. Dutch operations will report directly to Blok.

In Germany and Belgium, KPN will put forth its ‘challenger' strategy. Mobile broadband will be rolled out per region and the emphasis will be on attractive prices. The ethnic MVNO unit Ortel will enter new regions, so that revenue can grow "significantly", while iBasis will continues on its present path, "while maintaining margins."

The focus will go to three main issues:

• Telecom and ICT in the Netherlands;
• ‘Challenger’ activities outside of the Netherlands;
• The quality of service and reputation.

KPN has also provided a number of concrete operational targets for this period:

• Broadband Netherlands market share > 45 percent (currently 41%);
• Mobile Netherlands market share > 45 percent (currently 47%), number of stores to 300 (now 217);
• Mobile Germany market share > 20 percent (currently 16%), with EBITDA margin at 35-40 percent;
• Mobile Belgium market share 20-25 percent (currently 18%), with rising EBITDA margin;
• KPN should lead in ICT in the Benelux countries, accelerating Ortel’s growth on an international scale, iBasis will see continuing value creation;
• Quality improvements, with ‘first-time-right ' to 85-95 percent, the NPS (Net Promotional Score) will rise and enter the top 10 in terms of reputation in the Netherlands.

This should lead to the following financial targets: 

For 2011, KPN is guiding for EBITDA of over EUR 5.3 billion, capex of up to EUR 2 billion, a growing free cash flow and a dividend at or over EUR 0.85. For 2012, the free cash flow should reach EUR 2.4 billion and the dividend EUR 0.90. For 2013, the dividend is seen at EUR 0.95. For 2010, EBITDA was at EUR 5.5 billion, capex at EUR 1.8 billion, free cash flow at 2.428 billion and the dividend at EUR 0.80.